Why Some Lenders Choose to Outsource QC

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For many small to mid-sized lenders the decision to insource vs outsource quality control (QC) tends to weigh heavily on resource capacity, skillset and cost. For over 15 years I’ve talked with hundreds of lenders about the reasons they choose one over the other and their answers may or may not surprise you.

Many say they don’t have the expertise, particularly in the area of compliance to do it in house.  There is also a perception that the cost of doing it in-house is extremely high and that they cannot scale with their own limited resources when volume changes.  They believe the process is innately manual and aren’t thinking with an “automate first” mindset whereby they can use technology to get them over the hurdles.  

All good reasons to outsource, right? Absolutely.

Unfortunately, the problems aren’t solved by choosing just any loan quality audit service provider. There are typically three common challenges or complaints I hear with outsourcing.

Things are being missed in the review

Oftentimes, there isn’t a comprehensive look at all relevant data and documents and the ability to bring that data purity into the audit.  Vendors can be inflexible and won’t allow clients to add in their own tests that further align with their risk profile.  Cognizant of this need for a more robust audit, LoanLogics builds flexibility into our technology-enabled audit services. Our automation and rules-based technology can close this gap through a 360-degree view of data and docs, verification and validation prior to review and by offering lenders more control over their audits. We also make it a point to check-in with our clients’ needs during ongoing calibration calls.

The overall service is unsatisfactory 

I hear that many vendors are often solely focused on the compliance aspects of QC versus partnering with their clients to take a holistic look at QC for the business. Additionally, there is often a lack of service level agreement (SLA) transparency. Lenders are left wondering if reports are going to be late, leaving insufficient time to address defects.  Doing some upfront homework to understand the depth of a potential vendor’s capabilities in this area can ensure you’re aligned on overall service quality and responsiveness.

Poor insight and reporting capabilities

This one is significant.  Insights need to be timely and reporting becomes a major bottleneck in the process. When PDF reports come at the end of the month and the rebuttal process is a manual one it’s hard to get a clear picture of quality to make adjustments to your processes along the way.  While you’re responding to conditions, those reports remain static.  Alternatively, when automation is present in the rebuttal and reporting process, when changes are made updates are reflected in real-time. Each and every outsourcing pain point can be addressed through automation. With the right technology in place, it’s possible to get the quality experience you desire, no matter who is performing the audits. In one of our recent white papers, For Mortgage Loans, Audit Mastery Takes Technology, there’s a quote that really embodies that concept.

“The reality is, unless internal or outsourced loan quality management is backed by business rules driven automation, true efficiency and staff optimization is not possible.”

– For Mortgage Loans, Audit Mastery Takes Technology, 2019, LoanLogics white paper

As a regtech company we are able to back our audit services with powerful automation. As users of our own technology we can evolve our software in ways a technology only company often misses. And, the bottom line is that we have direct experience optimizing resources, creating efficiency gains and enabling broader actionable insights for our clients. 

If you’re looking for more insights on whether or not insourcing our outsourcing QC is right for you, watch our on-demand webinar “Insource or Outsource QC, Which is Right for Me?”

Want to learn more about LoanLogics Audit Services? Visit our website or request a short introduction to our services.

About the Author

Matt Woolley

Mr. Woolley leads the National Sales team and is responsible for establishing and executing LoanLogics sales strategies and managing the sales team activities related to the all LoanLogics products, including the mortgage industry's first Enterprise Loan Quality Management and Performance Analytics platform. He has held a variety of positions in sales and management in the mortgage technology and financial services industries with clients ranging from Government agencies, top 5 lenders, MI companies, as well as lenders, banks, and credit unions of all sizes across the country.